We get it. They’re long-term savings and investment vehicles so we should not care (at all) what happens from one month to the next—but we can’t help ourselves.
“November was a more typical month for trading activity among 401k investors,” according to Alight Solutions 401(k) Index. “The month had three days of above-normal1 trading activity—down from five in October, but up from the summer lull when there were no above-normal days from July through September.”
November observations include 15 of 21 days that favored fixed income funds with, on average, 0.015 percent of 401k balances traded daily.
As for inflows and outflows during the month, trading inflows mainly went to stable value, money market, and large U.S. equity funds.
Outflows were primarily from target date funds and company stock.
Investment portfolios saw asset allocation in equities increase slightly to 68.1 percent at the end of November from 68 percent at the end of October.
New contributions in equities decreased to 67.7 percent in November from 68.1 percent in October
After a volatile October, capital markets overall provided positive returns in November. Large-Cap U.S. equities were up 2 percent and Small-Cap U.S. equities were up 1.6 percent.
International equities were up 1 percent and the U.S. Bond market was up 0.6 percent.
A “normal” level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401k balances within the Alight Solutions 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity.
A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.